In two related cases, <span class="news-text_italic-underline">Techteryx Ltd v Legacy Trust Company Ltd and others [2025] HKCFI 665</span> and <span class="news-text_italic-underline">Techteryx Ltd v Legacy Trust Company Ltd and others [2025] HKCFI 787</span>, the Hong Kong Court of First Instance ruled that jurisdictional issues arising from fraud claims involving non-signatories to arbitration agreements should be deferred to the Singapore International Arbitration Centre (“<span class="news-text_medium">SIAC</span>”) for determination. The cases stemmed from a complex crypto dispute regarding the sale and purchase of a cryptocurrency business offering a “stablecoin” product.
The purchaser alleged fraudulent misrepresentation by the seller, claiming it was induced to acquire the business based on false assurances that sufficient reserves were held in escrow to back the digital tokens sold to investors. The seller initiated SIAC arbitration under the transaction documents, asserting the purchaser’s failure to meet payment obligations. However, the purchaser filed court proceedings in Hong Kong, alleging fraud and naming several defendants, including a financial adviser and an individual director of the seller.
The court cases involving the financial adviser and the individual defendant were contested with claims to arbitration. In the first case, the financial adviser argued that the court should decline jurisdiction over the purchaser’s claims because they were governed by a SIAC arbitration clause in an investment management agreement that predated the transaction, to which the purchaser was not a party. In the second case, the individual defendant applied for a stay of court proceedings, arguing that he could rely on the arbitration agreements in the transaction documents, even though he was not a signatory.
In both cases, the Hong Kong Court of First Instance deferred the jurisdictional issues to SIAC arbitration for resolution. In the first decision, the court determined that the purchaser was “arguably” bound by the arbitration agreement under Singapore law because it was acting as a beneficiary of a trust in its claims. The court rejected the argument that the arbitration agreement was void due to the alleged fragmentation of dispute resolution options, deferring this issue for consideration by the arbitral tribunal.
In the second decision, the court found that there was a prima facie case that the purchaser was bound by arbitration agreements under Delaware law, which applied to the transaction documents. The individual defendant, although a non-signatory, was entitled to rely on the arbitration clause due to his close relationship with the seller and the purchaser, with claims against him being closely tied to the contractual obligations under the transaction documents.
Both decisions highlight the complexity of disputes involving non-signatories to arbitration agreements, particularly in multi-party, multi-contract transactions. The court emphasised that while the decisions were preliminary, the arbitral tribunal would ultimately determine the scope of the arbitration agreements and jurisdiction. The decisions also suggest that parties seeking a stay of court proceedings must first convince the tribunal of its jurisdiction and may face challenges in defending any subsequent court challenges.
Additionally, the decisions reinforced that confidentiality concerns in arbitration-related court cases should be carefully considered, as the court did not find it necessary to rely on confidential arbitration details unless there were specific reasons to do so. This marks a key development in the handling of multi-jurisdictional arbitration disputes involving fraud claims and non-signatories.
